Federal and State Estimated Tax Payments – How to Pay Online

Your Federal and State taxes must be paid throughout the year on a “pay as you go” basis.  For employees – people who receive a W2 – taxes are withheld from each paycheck.  For self employed people, or people who have income in addition to earned income, quarterly estimated taxes are required.

How to Calculate Estimated Tax:
The best way to calculate your estimated tax payments – for both federal and state – is to prepare a projected 2008 tax return.  Each quarter you should estimate what your full-year 2008 income will be and calculate the tax you will owe based on this amount. 

For example, let’s say you received $100,000 of income in Q1 on which zero taxes were withheld.  Let’s also assume that you don’t know what you will receive in the next three quarters – could be more, could be less.  Project your 2008 income by annualizing the amount you earned in Q1.  In this example, you would project your 2008 earnings to be $400,000.  Calculate the federal and state tax you would owe based on this projection.   Pay ¼ of this amount by April 15, 2008.  Do this each quarter and “true-up” your payments so that you are on track to pay 100% of your tax liability by January 15th, 2009.

 

2008 Estimated Tax Payment Due Dates:

Q1: April 15, 2008

Q2: June 16, 2008

Q3: September 15, 2008

Q4: January 15, 2009

 

How to Make your Quarterly Estimated Payments Online: 

Federal:
Enroll in the Electronic Federal Tax Payment System – EFTPS.  Each quarter when you determine your tax liability, login to the site to make a payment.  Alternatively, write a check and mail form 1040-ES each quarter.

New York State:
Go to the New York State Online Tax Center Website:  http://www.tax.state.ny.us/nyshome/online.htm and register.   Each quarter when you determine your tax liability, login to the site and make a payment.

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12 Responses to Federal and State Estimated Tax Payments – How to Pay Online

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